42 percent of voters, including 15 percent of Republicans and 38 percent of independents think the Republican tax bill now working its way through a conference committee will raise their taxes, according to a new poll by Quinnipiac University.
Only 20 percent believe they will be getting a tax cut. 20 percent!
That’s not actually true. The vast majority of taxpayers will actually see a net tax cut, particularly under the House version of the bill, where rates on the individual side are permanently reduced.
The trouble Republicans have run into via messaging comes from two features of the plan that now have voters guessing whether their personal taxes will go up or down.
The first is the elimination of several itemized deductions, including the state and local tax deduction and the limiting of the real estate tax deduction of up to $10,000, taken by more than 40 million households.
In reality, this elimination is offset for most taxpayers by lowering rates, but they do not know that yet. And they will not find out until after the 2018 elections have taken place when they file their taxes in 2019.
Additionally, public perception of the tax plan is further muddied by the Senate plan, where individual rate reductions expire in 2025. So does the suspension of the itemized deductions, which go back into effect, unfortunately taxpayers don’t know that yet.
Besides the fact that in the Senate plan tax relief is not permanent, once adjusted for inflation, a good number of households techinically see an eventual tax hike.
This has led to claims, for example from the New York Times, that under the Senate plan that passed, come 2027, anywhere from 20 to 26 percent of those making up to $100,000 a year would seek a tax hike. 30 percent from $100,000 to $200,000 would see taxes go up, 40 percent from $200,000 to $500,000 and 37 percent from $500,000 to $1 million.
That, even though rates would be merely going back to where they were and the old deductions come back. But throw in the inflation indexing and, presto, you technically get a tax hike because a certain number of people wind up in a higher bracket. It’s misleading. If Congress does nothing, inflation indexing raises individuals’ taxes.
All of which leads to confusion on the individual side of the ledger. Suffice to say, tens of millions of Americans are left worrying whether or not they will get a tax hike. And Republicans are not doing a good job assuring their constituents that they’re not.
Couple that with a constant drumbeat of television ads by realtor associations upset about the capping of property and mortgage tax deductions, as well as the elimination of the state and local tax deductions.
Add inexplicable Republican talking points that single out blue states New York, California, Illinois and New Jersey for tax hikes, as if Republicans who live there somehow deserved to pay higher taxes. As if the tax code was the GOP mechanism’s for getting back at constituents who voted the wrong way or something. House Republicans have 35 members from those states, seats up for reelection in 2018. And a good percentage of constituents in those districts likely believe they are going to get a tax hike under the plan — even though after the rate reductions most of them will get tax cuts.
Plus, the fact that in every state, there are tens of thousands of households that could be seeing tax hikes, not just blue states.
As a result, public perception of the Republican tax plan is low.
And it all is so unnecessary.
Fortunately, now that the bill is in a conference committee, they can be reconciled, and a proposal could be produced that simply cuts everyone’s taxes and not leave it to voters’ imaginations when they walk into the voting booth in Nov. 2018.
There is a question of pay-for’s in order to meet up with the Senate’s rules on reconciliation. Which, it’s not a mystery, Congress could cut spending to get a good budget score on the Senate side. It’s really that simple. And then it must ensure that tax relief is permanent and will not sunset. No more fiscal cliffs.
To build more support for the tax cut bill, Republicans should cut more people’s taxes. Or better yet, cut everyone’s taxes.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.
